"TITLE 4

"CONCEALMENT

"Section 26. A neglect to communicate that which a party knows and ought to communicate, is called a
concealment.

"Section 27. A concealment whether intentional or unintentional entitles the injured party to rescind a
contract of insurance.

"Section 28. Each party to a contract of insurance must communicate to the other, in good faith, all facts
within his knowledge which are material to the contract and as to which he makes no warranty, and which
the other has not the means of ascertaining.

"Section 29. An intentional and fraudulent omission, on the part of one insured, to communicate
information of matters proving or tending to prove the falsity of a warranty, entitles the insurer to rescind.

"Section 30. Neither party to a contract of insurance is bound to communicate information of the matters
following, except in answer to the inquiries of the other:

"(a) Those which the other knows;

"(b) Those which, in the exercise of ordinary care, the other ought to know, and of which the
former has no reason to suppose him ignorant;

"(c) Those of which the other waives communication;

"(d) Those which prove or tend to prove the existence of a risk excluded by a warranty, and which
are not otherwise material; and

"(e) Those which relate to a risk excepted from the policy and which are not otherwise material.

"Section 31. Materiality is to be determined not by the event, but solely by the probable and reasonable
influence of the facts upon the party to whom the communication is due, in forming his estimate of the
disadvantages of the proposed contract, or in making his inquiries.

"Section 32. Each party to a contract of insurance is bound to know all the general causes which are open
to his inquiry, equally with that of the other, and which may affect the political or material perils
contemplated; and all general usages of trade.

"Section 33. The right to information of material facts may be waived, either by the terms of insurance or
by neglect to make inquiry as to such facts, where they are distinctly implied in other facts of which
information is communicated.

"Section 34. Information of the nature or amount of the interest of one insured need not be communicated
unless in answer to an inquiry, except as prescribed by Section 51.

"Section 35. Neither party to a contract of insurance is bound to communicate, even upon inquiry,
information of his own judgment upon the matters in question.

"TITLE 5
"REPRESENTATION
"Section 36. A representation may be oral or written.

"Section 37. A representation may be made at the time of, or before, issuance of the policy.

"Section 38. The language of a representation is to be interpreted by the same rules as the language of
contracts in general.

"Section 39. A representation as to the future is to be deemed a promise, unless it appears that it was
merely a statement of belief or expectation.

"Section 40. A representation cannot qualify an express provision in a contract of insurance, but it may
qualify an implied warranty.

"Section 41. A representation may be altered or withdrawn before the insurance is effected, but not
afterwards.

"Section 42. A representation must be presumed to refer to the date on which the contract goes into
effect.

"Section 43. When a person insured has no personal knowledge of a fact, he may nevertheless repeat
information which he has upon the subject, and which he believes to be true, with the explanation that he
does so on the information of others; or he may submit the information, in its whole extent, to the insurer;
and in neither case is he responsible for its truth, unless it proceeds from an agent of the insured, whose
duty it is to give the information.

"Section 44. A representation is to be deemed false when the facts fail to correspond with its assertions or
stipulations.

"Section 45. If a representation is false in a material point, whether affirmative or promissory, the injured
party is entitled to rescind the contract from the time when the representation becomes false.

"Section 46. The materiality of a representation is determined by the same rules as the materiality of a
concealment.

"Section 47. The provisions of this chapter apply as well to a modification of a contract of insurance as to
its original formation.

"Section 48. Whenever a right to rescind a contract of insurance is given to the insurer by any provision of
this chapter, such right must be exercised previous to the commencement of an action on the contract.

"After a policy of life insurance made payable on the death of the insured shall have been in force during
the lifetime of the insured for a period of two (2) years from the date of its issue or of its last
reinstatement, the insurer cannot prove that the policy is void ab initio or is rescindable by reason of the
fraudulent concealment or misrepresentation of the insured or his agent.

"TITLE 6
"THE POLICY

"Section 49. The written instrument in which a contract of insurance is set forth, is called a policy of
insurance.
"Section 50. The policy shall be in printed form which may contain blank spaces; and any word, phrase,
clause, mark, sign, symbol, signature, number, or word necessary to complete the contract of insurance
shall be written on the blank spaces provided therein.

"Any rider, clause, warranty or endorsement purporting to be part of the contract of insurance and which
is pasted or attached to said policy is not binding on the insured, unless the descriptive title or name of
the rider, clause, warranty or endorsement is also mentioned and written on the blank spaces provided in
the policy.

"Unless applied for by the insured or owner, any rider, clause, warranty or endorsement issued after the
original policy shall be countersigned by the insured or owner, which countersignature shall be taken as
his agreement to the contents of such rider, clause, warranty or endorsement.

"Notwithstanding the foregoing, the policy may be in electronic form subject to the pertinent provisions of
Republic Act No. 8792, otherwise known as the ‘Electronic Commerce Act’ and to such rules and
regulations as may be prescribed by the Commissioner.

"Section 51. A policy of insurance must specify:

"(a) The parties between whom the contract is made;

"(b) The amount to be insured except in the cases of open or running policies;

"(c) The premium, or if the insurance is of a character where the exact premium is only
determinable upon the termination of the contract, a statement of the basis and rates upon which
the final premium is to be determined;

"(d) The property or life insured;

"(e) The interest of the insured in property insured, if he is not the absolute owner thereof;

"(f) The risks insured against; and

"(g) The period during which the insurance is to continue.

"Section 52. Cover notes may be issued to bind insurance temporarily pending the issuance of the policy.
Within sixty (60) days after issue of a cover note, a policy shall be issued in lieu thereof, including within
its terms the identical insurance bound under the cover note and the premium therefor.

"Cover notes may be extended or renewed beyond such sixty (60) days with the written approval of the
Commissioner if he determines that such extension is not contrary to and is not for the purpose of
violating any provisions of this Code. The Commissioner may promulgate rules and regulations governing
such extensions for the purpose of preventing such violations and may by such rules and regulations
dispense with the requirement of written approval by him in the case of extension in compliance with such
rules and regulations.

"Section 53. The insurance proceeds shall be applied exclusively to the proper interest of the person in
whose name or for whose benefit it is made unless otherwise specified in the policy.

"Section 54. When an insurance contract is executed with an agent or trustee as the insured, the fact that
his principal or beneficiary is the real party in interest may be indicated by describing the insured as agent
or trustee, or by other general words in the policy.
"Section 55. To render an insurance effected by one partner or part-owner, applicable to the interest of
his co-partners or other part-owners, it is necessary that the terms of the policy should be such as are
applicable to the joint or common interest.

"Section 56. When the description of the insured in a policy is so general that it may comprehend any
person or any class of persons, only he who can show that it was intended to include him, can claim the
benefit of the policy.

"Section 57. A policy may be so framed that it will inure to the benefit of whomsoever, during the
continuance of the risk, may become the owner of the interest insured.

"Section 58. The mere transfer of a thing insured does not transfer the policy, but suspends it until the
same person becomes the owner of both the policy and the thing insured.

"Section 59. A policy is either open, valued or running.

"Section 60. An open policy is one in which the value of the thing insured is not agreed upon, and the
amount of the insurance merely represents the insurer’s maximum liability. The value of such thing
insured shall be ascertained at the time of the loss.

"Section 61. A valued policy is one which expresses on its face an agreement that the thing insured shall
be valued at a specific sum.

"Section 62. A running policy is one which contemplates successive insurances, and which provides that
the object of the policy may be from time to time defined, especially as to the subjects of insurance, by
additional statements or indorsements. 1âwphi1

"Section 63. A condition, stipulation, or agreement in any policy of insurance, limiting the time for
commencing an action thereunder to a period of less than one (1) year from the time when the cause of
action accrues, is void.

"Section 64. No policy of insurance other than life shall be cancelled by the insurer except upon prior
notice thereof to the insured, and no notice of cancellation shall be effective unless it is based on the
occurrence, after the effective date of the policy, of one or more of the following:

"(a) Nonpayment of premium;

"(b) Conviction of a crime arising out of acts increasing the hazard insured against;

"(c) Discovery of fraud or material misrepresentation;

"(d) Discovery of willful or reckless acts or omissions increasing the hazard insured against;

"(e) Physical changes in the property insured which result in the property becoming uninsurable;

"(f) Discovery of other insurance coverage that makes the total insurance in excess of the value
of the property insured; or

"(g) A determination by the Commissioner that the continuation of the policy would violate or
would place the insurer in violation of this Code.
"Section 65. All notices of cancellation mentioned in the preceding section shall be in writing, mailed or
delivered to the named insured at the address shown in the policy, or to his broker provided the broker is
authorized in writing by the policy owner to receive the notice of cancellation on his behalf, and shall
state:

"(a) Which of the grounds set forth in Section 64 is relied upon; and

"(b) That, upon written request of the named insured, the insurer will furnish the facts on which
the cancellation is based.

"Section 66. In case of insurance other than life, unless the insurer at least forty-five (45) days in advance
of the end of the policy period mails or delivers to the named insured at the address shown in the policy
notice of its intention not to renew the policy or to condition its renewal upon reduction of limits or
elimination of coverages, the named insured shall be entitled to renew the policy upon payment of the
premium due on the effective date of the renewal. Any policy written for a term of less than one (1) year
shall be considered as if written for a term of one (1) year. Any policy written for a term longer than one
(1) year or any policy with no fixed expiration date shall be considered as if written for successive policy
periods or terms of one (1) year.

"TITLE 7
"WARRANTIES

"Section 67. A warranty is either expressed or implied.

"Section 68. A warranty may relate to the past, the present, the future, or to any or all of these.

"Section 69. No particular form of words is necessary to create a warranty.

"Section 70. Without prejudice to Section 51, every express warranty, made at or before the execution of
a policy, must be contained in the policy itself, or in another instrument signed by the insured and referred
to in the policy as making a part of it.

"Section 71. A statement in a policy, of a matter relating to the person or thing insured, or to the risk, as
fact, is an express warranty thereof.

"Section 72. A statement in a policy, which imparts that it is intended to do or not to do a thing which
materially affects the risk, is a warranty that such act or omission shall take place.

"Section 73. When, before the time arrives for the performance of a warranty relating to the future, a loss
insured against happens, or performance becomes unlawful at the place of the contract, or impossible,
the omission to fulfill the warranty does not avoid the policy.

"Section 74. The violation of a material warranty, or other material provision of a policy, on the part of
either party thereto, entitles the other to rescind.

"Section 75. A policy may declare that a violation of specified provisions thereof shall avoid it, otherwise
the breach of an immaterial provision does not avoid the policy.

"Section 76. A breach of warranty without fraud merely exonerates an insurer from the time that it occurs,
or where it is broken in its inception, prevents the policy from attaching to the risk.